9911796707
TMI Blog2016 (9) TMI 1509X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore cannot in our view be considered as opposed to the decisions by the Hon ble Patna and jurisdictional High Courts, and must be considered as having been rendered in the facts of the case, i.e., where the assessee is not in the know of the charge against, or the default for which penalty is proposed to be levied on him. The assessee s argument fails. There being no separate initiation qua each addition - As we discern from the assessment order and the material on record, the assessee furnished no explanation during the assessment proceedings; failing to produce the creditors, as called for vide order sheet entry dated 14/10/2008. In penalty proceedings also the assessee s explanation (vide letter dated 18/6/2009) was only with reference to the addition u/s.68, i.e., qua which the penalty stands levied. Why? That is to say, there was no ambiguity or doubt that the penalty was initiated and proposed to be levied only qua this addition, i.e., qua which only it stands levied despite the assessee not furnishing any explanation qua the disallowance , to which there is no reference or even a whisper in the penalty order. Legally also, section 271(1B) stands inserted in the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, with the assessee, per its disclosure, owning up the credits, admitting the impugned sum as its income. The decisions in the case of Mak Data (P.) Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] and K. P. Madhusudhanan vs. CIT [ 2001 (8) TMI 8 - SUPREME COURT] among others, which clarify the settled position in the matter, are clearly applicable in the present case. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Considering the said depositions, as well as the facts of the case, he further held as: (at pg. 4 of the assessment order) 'Thus both the initial allotment and subsequent purchase is a sham transaction. All people examined have feigned ignorance of the transaction. All of them without any exception are unaware of the details of sources of funds in their bank accounts. They have not disclosed the sources of the funds even at subsequent stage. Ignorance of such high value transactions by all of them is not co-incidence. All these persons have been utilized by the assessee company to accommodate its undisclosed income.' Reliance was further placed by him on the decisions in the case of Sohan Lal vs. CIT [2002] 256 ITR 659 (P&H); MMAK Mohideen Thamby & Co. vs. CIT [1959] 36 ITR 481 (AP); and Shankar Industries vs. CIT [1978] 114 ITR 689 (Cal). Stating the ratio of each decision, he concluded as under: (at pg. 5 of the assessment order) 'Apart from these decision the test of human probabilities suggests that there is a singular pattern of replies given by the persons examined. All of them had no knowledge of the transactions undertaken by them. More importantly even the members o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly Exports P. Ltd. [2008] 319 ITR (St.) 5 (SC) (dismissing the Revenue's SLP against the judgment of the Delhi High Court reported at 299 ITR 268) is not applicable in-as-much as subsequent to the assessee filing the details of the shareholders, the AO had carried out investigation, bringing on record evidence to the effect that the transactions were bogus. The onus had thus shifted to the assessee, who had not brought on record any material rebutting the findings by the AO that the shareholders were bogus and mere name lenders. The assessee had, in fact, come forward owning the impugned investment. The proposed penalty was accordingly levied vide order dated 25.6.2009. In further appeal, where at the assessee again reiterated its stand, the ld. CIT(A) found the assessee's case as wholly arraigned against it; the genuineness of the transactions being totally unproved, with some of the creditors having categorically denied having given any sum to the assessee, much less exhibit their creditworthiness, disproving the transactions. The inference of the investment being the assessee's own money was thus legitimate. There was under the circumstances no question of the assessee's offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision in the case of Mithila Motors (supra), it was held as under: (pg. 665(e-g)) 'Sec. 274 of the Income-tax Act, 1961 contains a principle of natural justice of the assessee being heard before levying penalty. Rules of natural justice cannot be imprisoned in any straight-jacket formula. For sustaining a complaint of failure of the principles of natural justice on the ground of absence of opportunity, it has to be established that prejudice is caused to the concerned person by the procedure followed. The issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inapplicable portion cannot by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive.' The said decisions thus makes it abundantly clear that the notice u/s. 274 is an embodiment of the principle of natural justice, so that where no prejudice is caused to the assessee, as where he is made well aware of the default for which the penalty is proposed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT [2012] 349 ITR 196 (AP), besides others by the tribunal. In this regard, we find the assessee's claim as untenable, both factually and legally. On facts, the satisfaction of the AO as to the assessee having concealed the particulars of income - which the law deems on the assessee failing to furnish any explanation; or furnishes one which is found as false; or a satisfactory explanation, substantiating the same with reference to the disclosed facts, manifest in the assessment order itself, which (order) stands reproduced - in part (in this order), and also bears the gist of the statements - which are in fact revealing, recorded of all the traceable (six) persons who subscribed to the shares or purchased the shares therefrom, concluding the credit transactions to be bogus/sham, with the sums credited being in fact the assessee's own money. A finding to this effect is in fact not necessary for the purpose of invocation of section 68 which gets attracted on the assessee not furnishing a satisfactory explanation as to the nature and source of the funds, both of which are completely unproved in the instant case. We state so as the nature (of the credit) is equally unexplained in-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, etc. 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person - (a) ………….. (b) …………. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) …………… he may direct that such person shall pay by way of penalty - ..…… (1A) ……………… (1B) Where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under clause (c) of sub-section (1), such an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under the said clause (c).' Now, it is nobody's case that there has been no initiation in the instant case; the impugned notice u/s. 274 being issued only pursuant thereto. The several decisions relied upon - which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o of no moment. 5.3 The third proposition advanced is that a voluntary surrender would not attract penalty. The law in the matter is clear, and the assessee cannot take recourse to this plea upon detection of the 'income'. The consistent and uniform judicial opinion in the matter; case law on which is legion, is that blameworthiness attaches to the assessee with reference to the original return, which cannot be avoided for filing a fresh return or making a surrender after the concealment is detected by the A.O. (refer: CIT vs. A. Rm. A.L.A. Arunachalam Chettiar [AIR 1932 Mad. 433]; Vadilal Ichhachand vs. CIT [1957] 32 ITR 569 (Bom); Woman Padmanabh Dande vs. CIT [1952] 22 ITR 339 (Nag); Biland Ram Hargan Dass vs. CIT [1988] 171 ITR 390 (All)), to cite some. Rather, in the clear and undisputed facts of the case, delineated above, to consider the assessee's disclosure as voluntary would be presumptuous, if not ludicrous. Each of the decisions relied upon by the assessing the matter emphasize this aspect, i.e., of the disclosure being bona fide and voluntary - a matter or a question of fact, while it is just the opposite in the instant case. In Mak Data (P.) Ltd. v. CIT [2013] 358 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in law, as well as not sustainable in law in the facts and circumstances of the case. The decision in Lovely Exports P. Ltd. (supra), not pressed before us, stands discussed in CIT vs. Nova Promoters & Finlease P. Ltd. [2012] 342 ITR 169 (Del), explaining the scope of the explanation of the former decision. The clear findings by the Revenue being undisputed and unrebutted, there is no question of the application of the decision in Lovely Exports P. Ltd. (supra) in the instant case. The filing of the confirmations by the creditors, in this view of the matter, is of little consequence. If the share application and transfer forms, nay, blank cheques could be signed by the share applicants, why could not similarly the preprinted 'confirmations', which do not in any case prove capacity or genuineness of the credits. We have also gone through the creditor's bank statements. The same contain close to nil balance both prior and subsequent to the transactions, with there being no explanation of the credits therein or even the avenue of the withdrawals, so that the same have little evidentiary value in face of the clear evidence of they having acted as mere conduits. We may before closin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
